Can Apple Refuse to Sell a Laptop to an Iranian Citizen? Maybe.

“No iPad for you!” The sentiment may have evoked the fictional SoupNazi, but the salesperson was completely serious. After hearing 19-year-old Sahar Sabet speaking Persian with her uncle, an Apple store employee refusedtosellSabetaniPad, stating (according to Sabet): “I just can't sell this to you. Our countries have bad relations.”

While the Apple employee was wrong here, in other, not too different circumstances, that employee may have been right. Restrictions placed upon U.S. persons1 by the Department of Treasury’s Office of Foreign Assets Control (OFAC) state:

In general, a person may not export from the U.S. any goods, technology or services, if that person knows or has reason to know such items are intended specifically for supply, transshipment or reexportation to Iran. Further, such exportation is prohibited if the exporter knows or has reason to know the U.S. items are intended specifically for use in the production of, for commingling with, or for incorporation into goods, technology or services to be directly or indirectly supplied, transshipped or reexported exclusively or predominately to Iran or the Government of Iran.

While Sabet told a reporter that she had mentioned nothing about traveling back to Iran, companies--fearing the high penalties2 placed upon violators of the OFAC regulations--often restrict sales or services on the fear that an Iranian citizen could take the product(s) to Iran.

For example, Google reportedly blocks Persian-language advertisements because of the prohibition on financial transactions targeting Iranians. Given that there are only small pockets of Persian speakers outside of Iran, it would be difficult for Google to argue they're not targeting Iranians with ads in Persian; therefore, blocking the advertisements entirely ensures that they're in compliance with the regulations.

In this case, however, Apple was in the wrong. A statement Wednesday by Department of State spokesperson Victoria Nuland in response to the incident clarified that:

[T]here is no U.S. policy or law that prohibits Apple or any other company from selling products in the United States to anybody who’s intending to use the product in the United States, including somebody of Iranian descent or an Iranian citizen or any of that stuff. If you do want to take high-technology goods to Iran, you need a license. But that is a separate issue.

A statement was also issued on the US virtual embassy to Iran’s Facebookpage.

Given that exports to Iran are strictly controlled, where does the US government draw the line? Not at the border, as one might expect. A rule of the Department of Commerce (both Commerce and Treasury are involved in export controls), dubbed the “deemed export” rule, states that the Department’s Bureau of Industry and Security (BIS) “has jurisdiction for the ‘export’ or release of controlled technology and software to a foreign national in the United States.” A BISpolicydocumentonIran clarifies, however, that the “deemed export” rule does not apply to “persons who are permanent residents in the United States or are ‘protected individuals’ under the Immigration or Naturalization Act.3

So what does this mean for Iranians and other individuals from sanctioned countries? Basically, an Iranian student temporarily residing in the US with intent to go back to Iran may legitimately be denied purchase of an Apple product under export regulations, but a US Permanent Resident or someone with Iranian dual citizenship cannot be. Furthermore, a company or individual that wishes to export to Iran must apply for a license through the Department of Treasury’s OFAC.4

Additionally, it is unlawfulforanyonetravelingtoIran to bring controlled items (such as laptops or satellite cell phones) into Iran even temporarily without authorization from OFAC.

As we’ve previously written, there are notable exceptions to these rules. In 2010, OFAC issuedagenerallicense for companies to export communications software and services to users in Iran, Sudan, or Cuba:

“certain services and software incident to the exchange of personal communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging, provided that such services are publicly available at no cost to the user.”

While we hope this may have cleared some things up for those following the Apple story, the fact remains that the sanctions rules and other export controls remain unclear to many companies and individuals, even as the Internet and new technologies mean that goods and services cross borders more than ever before. To that end, we are continuing to work on this issue as it pertains to communications technology and services. While there have been some improvements, the U.S. sanctions and export regimes still deny too many critical tools to activists working to secure freedom in repressive countries.

As for Apple--which, as of 2:55pm on Wednesday, was still refusingcomment on the story--we hope that the company will issue an apology immediately, help Sabet get her iPad if she still wants one, and further clarify their own policies to both the public and to their employees to insure an incident like this doesn’t happen again.

1. U.S. persons, in this context, includes “companies, non-profit groups, government agencies, etc.”

2.Criminalpenalties for violations of the Iranian Transactions Regulations may result in a fine up to $1,000,000, and natural persons may be imprisoned for up to 20 years.

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